Pennsylvania Legislature Puts Insurers Over Injury Victims
[Update: Unfortunately, the "Fair Share Act" passed. Stuart Carpey has some details.]
It’s that time of year again. As The Legal Intelligencer and other sources report, Pennsylvania’s joint and several liability laws — which ensure that the economic damage caused by negligent companies falls on insurers and other defendants proven to have been at fault rather than on injured plaintiffs — are on the chopping block again at the Pennsylvania General Assembly:
At press time, the state House of Representatives was on its third consideration of House Bill 1, called the “Fair Share Act.” The act would change Pennsylvania’s doctrine of joint and several liability so that defendants that are apportioned responsibility for causing a plaintiff’s injuries at 60 percent or less would only pay the portion they were found liable for, rather than being on the hook if other liable defendants can’t pay their portion of the plaintiff award. Joint and several liability would still be in place for defendants found more than 60 percent liable. The state Senate is still considering its own version of the bill, Senate Bill 2.
If the legislation passes the Senate, it would likely become law. During his budget address in March, Gov. Tom Corbett, a Republican, said that he would sign legislation abrogating the doctrine of joint and several liability, arguing legal liability scares jobs away and leaves minor players stuck paying the full price of lawsuits.
I like how it’s “House Bill 1.” There was nothing more important on their agenda than boosting insurance company profits at the expense of the serious injured.
It’s hard for me to accept that joint and several liability in personal injury lawsuits has a negative effect on the local economy, since I read publications like Insurance Journal, which says that Pennsylvania’s insurance companies — the companies that bear the brunt of joint and several liability’s effects — are doing just fine, even in this weak economy:
Six years ago, Harleysville Group was in need of a big change. The Pennsylvania-based insurer had just come out of the worst performing year in its history. That’s when newly appointed CEO Michael Browne — who declared the company’s performance in 2003 was “totally unacceptable” —stepped in and began his plan to execute a turnaround at the stumbling insurer.
But turnarounds take time, and with the benefit of hindsight, it’s clear that the decisions made by Browne and the rest of the management are paying off for Harleysville. Since Browne’s first full year on the job, Harleysville’s return on equity has exceeded 12 percent annually among the highest in the property casualty industry. It’s also seen increased premium volume and even upgrade — to “A” — from A.M. Best, an increasingly rare feat in the last two years.
Since eliminating joint and several liability has nothing to do with improving the economy, let’s consider what they’re really driving at in cases like this one:
Authorities say a roofer wasn’t wearing a safety harness when he fell and died in a roof collapse at a prestigious eastern Pennsylvania private school.
Montgomery County Coroner Walter Hofman says Kevin Sensenig had climbed on to the roof to show three workers what needed to be done when a roof collapsed Monday morning at The Hill School in Pottstown.
Sensenig was the vice president of R.L. Sensenig Co. of Ephrata. Hofman told the Reading Eagle newspaper Sensenig was the only worker not wearing a safety harness.
A second worker was trapped for more than an hour before emergency workers freed him. Hofman says his injuries don’t appear to be life-threatening.
Officials from the Occupational Safety and Health Administration are investigating.
Let’s assume, hypothetically, that a jury in a subsequent wrongful death lawsuit determines that the fall accident was caused:
- 40% by the worker for not wearing a harness;
- 30% by a construction company which negligently installed the support beams incorrectly; and,
- 30% by a roofing company which defectively designed and manufactured the roof.
Under any of these scenarios, if the construction company and roofing company are both adequately insured, then the family for the worker killed on the job collects 60% of the jury verdict evenly from the construction company’s and roofing company’s insurers. Joint and several liability never plays a role.
Joint and several liability, however, comes in the play when one of the defendants is inadequately insured and otherwise unable to pay for their liability. Let’s assume that in the above example the construction company has an insurance policy which exceeds the total liability for the case, but the roo was so dangerous and defectively designed that they’ve exhausted their product liability insurance and are going through a structured bankruptcy reorganization.
Then what? Under the current joint and several liability laws, the injured plaintiff can collect the whole 60% from the construction company’s insurance policy, but the story doesn’t end there. The insurance company can then seek “contribution” from the roofing company, and recover up to the full 30%, if funds are available.
Is that so unfair? That we allow injured people to recover from whichever defendant proven to have been negligent has the funds, after which that paying defendant then bears the burden of recovering the overpayment from other defendants?
According to the Republicans in the Pennsylvania General Assembly and Governor Corbett, though, it’s unfair to put injured plaintiffs before negligent defendants and their insurers. They think the workers’ family should be the ones chasing the roofing company in bankruptcy, rather than the construction company’s insurance company. After all, they say, why burden a poor, helpless insurance company with paying its in-house lawyers to file a routine bankruptcy claim when they can stick it to a family that just lost their breadwinner? “Fairness,” they call it.
That’s the case under both the “Fair Share Act” in the House and Senate Bill 500. SB 500, though, at least limits this unfairness to situations in which the plaintiff played a substantial negligent role in causing their injuries. The “Fair Share Act,” however, with its “60% or less” line, would create a situation in which, if the construction company and roofing company were each found 50% liable, and the worker was found 0% liable, his family would nonetheless not be able to enforce anything over 50% against either company, making them — wholly innocent in the entire process — bear the risk of financial loss over an insurance company whose insured company was found to be half responsible for the accident in the first place.
This issue boils down to a simple question about whom you think should bear the risk of a negligent defendant being uninsured or bankrupt: the injured victims or negligent defendants’ insurance companies. If you live in Pennsylvania, call your legislator and let them know what you think.